While the rest of us have resigned ourselves to the fact that Greece, and most of Europe, is headed for a sustained downturn (probably a depression) despite a bailout, leaders here and there continue to pump out funds to bail out the crisis-ridden continent.

From Bloomberg:

Investor Jim Rogers said Europe's bailout of indebted nations to overcome the sovereign-debt crisis is just "another nail in the coffin" for the euro as higher spending increases the region's debt.

The 16-nation currency weakened for a second day against the dollar after rallying as much as 2.7 percent on May 10, when the governments of the 16 euro nations agreed to make loans of as much as 750 billion euros ($962 billion) available to countries under attack from speculators and the European Central Bank pledged to intervene in government securities markets.

He makes an excellent point about sound money and overspending, one that's been a consistent drumbeat of ours at C4L, among others:

"I was stunned," Rogers, chairman of Rogers Holdings, said in a Bloomberg Television interview in Singapore. "This means that they've given up on the euro, they don't particularly care if they have a sound currency, you have all these countries spending money they don't have and it's now going to continue.

U.S. and European stocks fell yesterday on concern the plan to rescue debt-laden governments in the region will fail to reverse the euro’s worst start to a year since 2000, forcing the European Central Bank to keep rates at a record low for longer.

New York University professor Nouriel Roubini said Greece and other “laggards” in the euro area may be forced to abandon the common currency in the next few years to spur their economies. The euro will remain the currency for a smaller number of countries that have “stronger fiscal and economic fundamentals,” he said in an interview on Bloomberg Television.

Greece’s budget deficit of 13.6 percent of gross domestic product is the second-highest in the euro zone after Ireland’s 14.3 percent. As part of the bailout plan, Spain and Portugal also pledged deeper deficit reductions than previously planned.

Lagging Growth

The euro weakened against 13 of its 16 major counterparts and fell to $1.2644 from $1.2662 in New York yesterday. Last week, the currency fell to the weakest level against the dollar since January 2009 as stocks dropped globally and borrowing costs soared in nations from Greece to Portugal and Spain.

Economic growth in the nations that share the euro will lag behind the U.S. by almost 1.5 percentage points next year, Bloomberg surveys of economists show.

All paper currencies are being “debased,” with the euro currency union at risk of being “dissolved,” Rogers said, adding that he continues to own the dollar, the Swiss franc, the Japanese yen and the euro.

“It’s a political currency and nobody is minding the economics behind the necessities to have a strong currency,” Rogers said. “I’m afraid it’s going to dissolve. They’re throwing more money at the problem and it’s going to make things worse down the road.”

Shorting Emerging Markets

Investors should instead buy precious metals including gold or currencies of countries that have large natural resources, Rogers said. Among other asset classes, he favors agricultural commodities as the best bet for the next decade as well as silver because prices haven’t rallied.

Rogers started short-selling emerging markets in the past two weeks after last year’s rally, he said. Still, the investor will seek to add to his Chinese holdings if shares fall further.

Chinese stocks are the world’s second-worst performers this year as government officials sought to curb accelerating inflation and speculation in the nation’s real estate market. The Shanghai Composite Index yesterday entered a bear market after falling 21 percent from its Nov. 23 high.

Spending money you don't have is a common theme in this continuing crisis. But some countries are prescribing exactly the wrong remedy for the situation. Portugal is actually instituting a "crisis tax" -- an awful idea -- to deal with their debt problems, which will simultaneously punish taxpayers for the government's missteps while driving even more business away from the already economically lagging country. Seems like everyone just wants to keep spending what they don't have to get out of debt trouble. That's like drinking more to cure your drunkenness.

Can the U.S. be far behind with a "crisis tax"-like measure to address our own issues? Our government never lacks for bad ideas.

So the world now finds itself in a situation where the nation claiming to be the free and prosperous capitalist economy (USA) may end up in hock to a nation (China) that professes to be communist (but these days seems to act more capitalist than we do)-- with Old Europe fallen to pieces in the background."http://www.campaignforliberty.com/http://www.bloomberg.com/apps/news?pid=20601010&sid=auuRue7wyMWM